Tariffs are shaking things up, and, with smart policy changes, better infrastructure, and expanding markets, we take a dive into which regions are quickly becoming the new go-to destinations for FDI.
Tariffs are no longer just about trade—they’re now shaping how and where companies invest, redefining global investment patterns in the process.
In this fast-changing, volatile, and complex global environment, emerging economies spanning Asia (excluding Israel, Japan, and South Korea), Africa, Latin America, the Caribbean, and Oceania (excluding Australia and New Zealand)—are fast becoming popular FDI destinations.
When the pandemic exposed the fragility of global supply chains, companies began rethinking their sourcing strategies. This led to a surge in nearshoring—moving production closer to home—and friend-shoring, where businesses shifted supply chains to politically aligned, trusted countries.
In response, emerging economies across the Global South seized the moment. These regions quickly positioned themselves as attractive destinations for foreign investment, offering alternative supply chain hubs, growing consumer markets, and government-led incentives. For global investors looking for both stability and growth, the Global South is now firmly on the map.
FDI drives growth by bringing capital, jobs, and technology, while raising environmental and social standards. In the Global South, rising competition to draw FDI is pushing countries to rethink strategies to attract and retain high-stakes investments.
Investment planning today increasingly requires factoring in a range of scenarios shaped by evolving tariffs, regulatory changes, and geopolitical dynamics and all three are drawing the investment map globally.
According to the UNCTAD report ‘Foreign Investments: Diverging Trends Amid Global Challenges’, released in January this year, China faced a 29% drop in FDI, now 40% below its 2022 peak, largely due to rising geopolitical tensions, regulatory uncertainties, and a shift in investor sentiment.
As investors move beyond traditional hubs, the Global South is drawing significant FDI—driven by bold infrastructure projects, rapid tech growth, supportive policy reforms, and a collective shift toward sustainable development.
India has emerged as a leading destination for foreign direct investment (FDI), attracting $76 billion in greenfield FDI in 2024—the highest in the Asia-Pacific region, thanks to major investments in semiconductors and renewable energy.
India’s growing appeal to global investors isn’t just a lucky break—it’s the result of steady, focused efforts. Campaigns like Make in India, relaxed rules across sectors, and the rollout of GST have helped build trust among investors. Add to that low labour costs and smart incentives, and it’s easy to see why multinationals are paying attention. Production-Linked Incentive (PLI) schemes are aimed at boosting domestic manufacturing and reducing import dependence.
What’s really pushing the shift, though, is how India has been working to boost innovation, cut down red tape, and make doing business easier. Most sectors, including insurance, infrastructure, technology, and green energy, are now open to 100% FDI without heavy paperwork, except for a few sensitive ones.
The government has also introduced tax-friendly measures for startups and foreign firms, including a lower income tax rate for foreign companies—making India an even more attractive place to invest.
Global giants like Apple, Foxconn, and Tesla are ramping up investments in semiconductors, artificial intelligence, and electric vehicles.
The renewable energy sector has seen a sharp rise in investor interest, with its share in total FDI inflows growing from around 1% in FY21 to 8% in FY25.
Since January 2025, India has been consistently attracting over $4.5 billion in monthly FDI, supported by simplified compliance, a single-window approval system, and policies focused on investor confidence.
According to Deloitte India, the country’s liberalised FDI policy offers global investors stability, predictability, and broad-based opportunities across a fast-growing economy.
The ASEAN bloc is also strategically seeking FDI with its long-term developmental objectives. UNCTAD report highlights that despite a general global dip, the region collectively recorded a 2% rise in FDI, reaching an unprecedented $235 billion.
Vietnam has demonstrated a remarkable surge in FDI, witnessing a 48.6% year-on-year increase in early 2025, with the processing and manufacturing sectors leading this impressive growth.
The country’s tech and semiconductor sectors are rapidly growing, fuelled by a young, tech-savvy workforce and strong government support. The semiconductor industry alone is projected to reach a market value of $20–30 billion by 2030.
Notable investment deals include a significant joint venture between ST Telemedia Global Data Centres and VNG Corporation, KKR’s strategic acquisition of Saigon Medical Group, and SK Group’s substantial investment in the semiconductor firm Iscvina.
The nation has set its sights on becoming a regional AI hub by 2030, actively nurturing local startups and cultivating AI talent.
The recently revised Telecoms Law, effective in 2025, is strategically designed to streamline foreign investment in high-tech sectors such as advanced data centres and cloud computing infrastructure.
The UAE has boosted its manufacturing sector through key initiatives like “Make it in the Emirates,” the National In-Country Value (ICV) Program, and the Technology Transformation Program. These strategies have attracted both local and global investors, supporting economic diversification beyond oil.
According to UNCTAD’s World Investment Report 2024, the UAE saw FDI inflows rise to $30.69 billion in 2023, up from $22.74 billion in 2022—making it the second-highest recipient of FDI globally.
The UAE continues to enjoy robust and steady economic growth, with its GDP projected to expand by approximately 4% in 2025.
Mexico has also emerged as a prominent manufacturing and logistics hub, recording a substantial $36.872 billion in FDI in 2024—a 2.3% increase from the previous year.
However, recent data indicates a potential shift, with only 24% of FDI announcements in early 2025 targeting the manufacturing sector, signalling a possible pivot toward other promising areas of the economy.
Mexico attracted a record preliminary FDI total of $36.87 billion in 2024, according to the federal Economy Ministry. While this is the highest initial figure on record, it remains below the 2013 peak of $48.35 billion, which was largely driven by the sale of Grupo Modelo to AB InBev.
Mexico’s strategic geographical proximity to the U.S. made it a preferred destination for near-shoring initiatives. The US remained the top investor in the country in contrast to Canada which faced the risk of missing out on the near-shoring boom due to comparatively lower labour productivity.
Another Latin American country, Brazil has ramped up its FDI efforts by introducing targeted regulations to attract key infrastructure investment. It has also committed $4 billion through its National AI Plan to boost technological innovation and drive economic modernization.
In the Middle East, the UAE is strengthening its status as a leading investment hub, thanks to its consistently business-friendly policies. According to UNCTAD’s 2024 World Investment Report, FDI inflows to the UAE jumped 35% in 2023, reaching AED 112.6 billion.
Africa saw a significant 85% rise in FDI in 2024, reaching $94 billion, with countries like Egypt, Nigeria, Kenya, and South Africa attracting growing investor interest through infrastructure-driven projects. However, Least Developed Countries (LDCs) are increasingly sidelined in global FDI, with their share of global greenfield projects dropping from 3% in the mid-2010s to just 1% today.
Egypt accounted for a substantial third of this total, largely driven by a landmark $35 billion UAE-backed deal focused on developing the ambitious Ras El-Hekma smart city project. The country has proactively implemented nearly 500 FDI-focused reforms, with a strong emphasis on promoting renewable energy and offering attractive tax exemptions—excluding VAT—for periods of up to five years.
Despite the prevailing global uncertainties, a sense of underlying investment optimism persists. According to the 2025 Kearney Confidence Index, a significant 84% of global executives intend to increase their FDI over the next three years.
